The effect of financial reporting tone on stock returns of companies listed on the Tehran Stock Exchange

Document Type : Original Article

Authors
Amin Safarnezhad Boroujeni 1
Ali Akbar Chahar Mahali 1
Jamshid Peik Falak 1
mohammad rabiei 2
1 Department of Accounting, North Tehran branch, Islamic Azad University, Tehran, Iran,
2 Iranian research institute for information science and technology (IranDoc), Tehran, Iran
Abstract
In recent years, the analysis of various aspects of qualitative information in financial statements is one of the important tools for decision making by investors and other capital market users. The purpose of this study is to investigate the effect of financial reporting tone, as one of the important aspects of quality financial reporting information, on stock returns.In order to investigate this issue empirically, the present study uses the methodology of textual analysis and information of 90 companies listed on the Tehran Stock Exchange between 1392 and 1398. The statistical technique used to test the hypotheses is multivariate regression of composite data using statistical software. The tone of the vocabulary-based financial statements was measured in Python software.The results show that the tone of financial reporting has a negative and significant effect on the stock returns of companies listed on the Tehran Stock Exchange.This research, while developing research in the field of qualitative information, existing knowledge in the field of emerging sub-sectors; That is, it deepens the tone of reporting.
Keywords
financial reporting tone
stock returns
text mining
  • پله، مولود؛ ایزدی نیا، ناصر؛ امیری، هادی. (1398). بررسی تأثیر لحن گزارش‌های فعالیت هیئت‌مدیره بر عملکرد آتی شرکت‌ها مبتنی بر دو دیدگاه علامت‌دهی و رفتار فرصت‌طلبانه مدیران. دو فصلنامه حسابداری ارزشی و رفتاری. ۴ (۸) :1-31.
  • پورکریم، محمد؛ جبارزاده کنگرلویی، سعید؛ بحری ثالث، جمال؛ قلاوندی، حسن. (1397). تأثیر مدیریت سود بر لحن گزارشگری مالی در نظام حسابداری ایران. پژوهش های حسابداری مالی، 10(3): 21-44.
  • تورچی، محمود؛ لاری دشت بیاض، محمود؛ رازدار، محمد رضا. (1400). بررسی اثر لحنِ گزارش پیش‌بینی سود بر واکنش سرمایه گذاران و پیش بینی عملکرد. دانش سرمایه‌گذاری، 10(38): 369-388.
  • حصاری، جواد؛ سعیدی، هادی. (1400). بررسی رابطه بین افشای داوطلبانه زبان گزارشگری مالی توسعه‌پذیر و ارزش‌گذاری بازار سهام و نقش حاکمیت شرکتی در شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران. پیشرفت های مالی و سرمایه گذاری، 1(1)، 37-54.
  • رهنمای رود پشتی، فریدون؛ نیکو مرام، هاشم؛ نونهال نهر، علی اکبر. (1391). ارزیابی تأثیر رویکردهای قضاوتی و شناختی زبان در گزارش‌های توضیحی حسابداری، فصلنامه بررسیهای حسابداری و حسابرسی، 19(2) : 47-72.
  • ستایش، محمد حسین؛ شمس الدینی، کاظم. (1395)، بررسی رابطه بین گرایش احساسی سرمایه گذاران و قیمت سهام شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران، پیشرفت های حسابداری، 8(1) : 103-125.
  • شمس الدینی، کاظم؛ دانشی وحید، سیدی فاطمه. (1397). بررسی تأثیر رفتار سرمایه گذاران و مدیریت بر بازدهی سهام. دانش حسابداری، 9(2): 163-189.
  • کیان، علیرضا؛ فقیه، محسن؛ امیری، مژگان. (1399). ارتباط بین محافظه‌کاری حسابداری و خوانایی گزارش‌های مالی در شرکت‌های دولتی. دوفصلنامه علمی حسابداری دولتی، 7(1)، 129-144
  • محسنی، عبدالرضا؛ رهنمای رودپشتی، فریدون. (1398). عملکرد مالی و کارکردهای مدیریت لحن نوشتار در گزارشگری مالی. پژوهش های تجربی حسابداری، 9(4), 29-48.
  • میرزائی، سعیده؛ عبدلی، محمدرضا؛ کوشکی جهرمی، علیرضا. (1399). بررسی تاثیر لحن بدبینانه گزارشگری مالی بر گزارشگری مالی متهورانه: حفاظت از حقوق سهامداران. مطالعات تجربی حسابداری مالی، 17(65), 109-138.
  • میرعلی، مهدیه؛ غلامی مقدم، فائزه؛ حصارزاده، رضا. (1397). بررسی رابطه لحن گزارشگری مالی با عملکرد آتی شرکت و بازده بازار. دانش حسابداری مالی، 5(3): 81-98.
  • Aly, D., El-Halaby, Sh., Hussainey, Kh. (2018). Tone disclosure and financial performance: evidence from Egypt", Accounting Research Journal, 31(1): 63-74.
  • Boudt, K., & Thewissen, J. (2019). Jockeying for position in CEO letters: Impression management and sentiment analytics. Financial Management, 48(1), 77-115.‏
  • Carlsson, S. , Lamti, R. (2015). Tone Management and Earnings Management. School of Business, Economics and Law, Gothenburg University, Master Degree Project. No. 2015: 18.
  • Davis, A. K., Piger, J. M., & Sedor, L. M. (2006). Beyond the numbers: An analysis of optimistic and pessimistic language in earnings press releases (No. 2006-005). Federal Reserve Bank of St. Louis.
  • Elrod, G. B. (2010). Is There Predictive Value In The Words Managers Use? A Key Word Analysis Of The Annual Report's Management Discussion And Analysis.
  • Hesari, J., Saeidi, H. (2021). Investigating The Relationship between XBRL Voluntary Disclosure and Stock Market Valuation and The Role of Corporate Governance of listed companies in Tehran Stock Exchange (TSE). Advances in Finance and Investment, 1(1), 37-54. (In Persian).
  • Huang, X., Teoh, S. H., & Zhang, Y. (2014). Tone management. The Accounting Review, 89(3), 1083-1113.‏
  • Iatridis, G. E. (2016). Financial reporting language in financial statements: Does pessimism restrict the potential for managerial opportunism?. International Review of Financial Analysis, 45: 1-17.
  • Kang, T., Park, D. H., & Han, I. (2018). Beyond the numbers: The effect of 10 -K tone on firms’ performance predictions using text analytics. Telematics and Informatics, 35(2), 370 -381.‏
  • Kian, A., Faghih, M., Amiri, M. (2021). The Relationship of between Accounting Conservatism and Financial Reporting Readability in Public Companies. Journal of Governmental Accounting, 7(1), 129-144. (In Persian).
  • Kumas, A., & Cready, W. M. (2015). Aggregate Market Attention around Earnings Announcements. SSRN Electronic Journal, 1-49. Available at SSRN: https://ssrn. com/abstract, 2547936.‏
  • Leung, S., Parker, L., & Courtis, J. (2015). Impression management through minimal narrative disclosure in annual reports. The British accounting review, 47(3), 275-289.‏
  • Li, F. (2010). Textual analysis of corporate disclosures: A survey of the literature. Journal of accounting literature, 29(1), 143-165.‏
  • Lorsbach, T. (2019). Word Power: Content Analysis in the Presence of Competing Information. Available at SSRN 3316089.
  • Loughran, T., & McDonald, B. (2011). When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10 -Ks. Journal of Finance, 66: 35-65.
  • Melloni, G., Stacchezzini, R., & Lai, A. (2016). The tone of business model disclosure: an impression management analysis of the integrated reports. Journal of Management & Governance, 20(2): 295-320.
  • Mirali, M., Gholami moghaddam, F., Hesarzadeh, R. (2018). Investigation of the Relationship between Financial Reporting Tone with Future Corporate Performance and Market Return. Financial Accounting Knowledge, 5(3), 81-98. (In Persian).
  • Mirzayee, S., Abdoli, M., Koushki jahromi, A. (2020). Financial reporting language Bad on Aggressive Financial Reporting Investor protection. Empirical Studies in Financial Accounting, 17(65), 109-138. (In Persian).
  • Malaquias RF, Júnior DMB. Positive Tone in Management Reports and Volatility of Stock Returns. Global Business Review. November 2021. doi:10.1177/09721509211054279
  • mohseni, A., rahnamay roodposhti, F. (2020). Financial Performance and Writing Tone Management in Financial Reporting. Empirical Research in Accounting, 9(4), 29-48. (In Persian).
  • Peleh M, Izadinia N, Amiri H.(2020) The Effect of Tone in Board's Activity Reports on Future Performance Based on Signaling and Opportunistic Approach. journal of Value & Behavioral Accounting. 4 (8) :1-31(In Persian).
  • Pourkarim, M., Jabbarzadeh Kangarlouei, S., Bahri Sales, J., Galavandi, H. (2018). Impact of Earnings Management on Tone of Financial Reporting in Iranian Accounting System. Journal of Financial Accounting Research, 10(3), 21-44 (In Persian).
  • Rahnamay Roodposhti, F., Nikoomaram, H., Nonahal Nahr, A. (2012). Evaluating the Effects of Language Judgmental and Cognitive Approaches in Accounting Narratives. Accounting and Auditing Review, 19(2), 47-72. (In Persian).
  • Setayesh, M., Shamsedini, K. (2016). An Investigation of the Relationship between Investor Sentiment and Price Stocks in Tehran Stock Exchange (TSE). Journal of Accounting Advances (J.A.A), 8(1), 103-125. (In Persian).
  • Shamsadini , K., Daneshi, V., Seyedi, F. (2018). Investigating the Effect of Investors' Behavior and Management on Stock Returns. Journal of Accounting Knowledge, 9(2), 163-189. (In Persian).
  • Tetlock, P. C., Saar‐Tsechansky, M., & Macskassy, S. (2008). More than words: Quantifying language to measure firms' fundamentals. The Journal of Finance, 63(3):1437-1467.
  • Toorchi, M., Lari Dashtebayaz, M., Razdar, M. (2021). Investigate the Effect of Prediction Profit Reporting Tone on Investors' Reactions and Performance Prediction. Journal of Investment Knowledge, 10(38), 369-388 (In Persian).
  • Wolk, H. I., Dodd, J. L., & Rozycki, J. J. (2016). Accounting theory: conceptual issues in a political and economic environment. Sage Publications.‏
  • Wu, D. X., Yao, X., & Guo, J. L. (2021). Is Textual Tone Informative or Inflated for Firm’s Future Value? Evidence from Chinese Listed Firms. Economic Modelling, 94, 513-525.